CMPS Regulatory Compliance & Lending Guidelines

Question 1

What is the primary purpose of the Truth in Lending Act (TILA)?

Accepted Answer

To ensure full disclosure of loan terms to consumers

Answer

The primary purpose of the Truth in Lending Act (TILA) is to ensure full disclosure of loan terms to consumers. This federal law requires lenders to provide clear and comprehensive information about the costs and terms of credit, including the annual percentage rate (APR) and total finance charges. TILA empowers consumers to compare loan offers and make informed borrowing decisions.

Question 2

Which federal law helps prevent discriminatory lending practices?

Accepted Answer

Equal Credit Opportunity Act (ECOA)

Answer

The Equal Credit Opportunity Act (ECOA) is the federal law that helps prevent discriminatory lending practices. It prohibits creditors from discriminating against applicants based on race, color, religion, national origin, sex, marital status, age, or because they receive public assistance. ECOA ensures fair and equal access to credit for all consumers.

Question 3

What is the role of the Dodd-Frank Act in lending regulation?

Accepted Answer

It created the Consumer Financial Protection Bureau (CFPB)

Answer

The Dodd-Frank Act played a significant role in lending regulation by creating the Consumer Financial Protection Bureau (CFPB). This agency was established to protect consumers in the financial marketplace by enforcing federal consumer financial laws and ensuring fair, transparent, and competitive practices. Dodd-Frank aimed to prevent a recurrence of the 2008 financial crisis through comprehensive reforms.

Question 4

Why is the Real Estate Settlement Procedures Act (RESPA) important?

Accepted Answer

It requires transparency in closing costs

Answer

The Real Estate Settlement Procedures Act (RESPA) is a federal law designed to protect consumers during the real estate settlement process. Its core purpose is to ensure transparency by requiring lenders to provide clear disclosures about all closing costs and settlement services. This prevents hidden fees and allows borrowers to make informed decisions about their mortgage loans.

Question 5

Which document outlines the APR, loan amount, and payment schedule?

Accepted Answer

Loan Estimate

Answer

The Loan Estimate is a crucial disclosure document provided to mortgage applicants within three business days of applying for a loan. It clearly outlines key information such as the estimated Annual Percentage Rate (APR), the loan amount, the projected monthly payment, and an itemized list of estimated closing costs. This document helps borrowers compare different loan offers before committing to a lender.

(CMPS) Certified Mortgage Planning Specialist Practice Test

(CMPS) Certified Mortgage Planning Specialist Practice Test

CMPS Regulatory Compliance & Lending Guidelines